In Slow Times, Mom and Pops Have the Edge

By LORRIE DELK WALKERPOLK COUNTY BUSINESS JOURNAL

Monday

Apr 28, 2008 at 12:01 AM

WINTER HAVEN | In an economy where people are struggling to make mortgage payments and fill gas tanks, restaurants are taking steps to prevent patrons from sliding back from the dinner table and tightening their belts another notch.

Several Polk restaurants have closed their doors in the past few months, and some directly attribute it to the economy.

Two Georgee's restaurants in Lake Alfred and Winter Haven closed March 9. The reason posted on the marquee? The economy.

Combine increased real estate taxes with a couple of minimum wage increases and increased ethanol production driving up food costs, and Mike Nolen Sr. determined it was time to close the doors.

"There's a limit to how much you can pass along to the customers," said Nolen, who was in the restaurant business 23 years. "We had very loyal employees and customers, but business conditions weren't improving."

Nolen received calls from people interested in reopening the restaurants. Reggie Owens, his operations director for the past 23 years, signed a lease on April 3 to reopen the Lake Alfred Georgee's location. He plans to do so by May 1.

Even though the economy is sluggish, reopening Georgee's will be a smart business move, Owens said. The Winter Haven Georgee's location was "a real drag on the company."

The company also had administrative staff to pay when both locations were open. That staff won't be needed any longer.

The overhead is lower at the Lake Alfred location and doesn't require as much business to survive, and Owens and his wife will work at the restaurant, which will reduce labor costs. The location also will be closed on Sundays, which saves a day's worth of labor, electricity and food costs. The restaurant typically lost money when it was open Sundays, he said.

Owens plans to negotiate with vendors to ensure he gets the best food prices, and he will offer specials to entice customers.

Promoting his restaurants through specials, advertising, coupons and fund raising partnerships helps Dick Davis sustain the level of business he is accustomed to at his two full-service Woody's Bar-B-Q restaurants in Winter Haven and Lake Wales and the Woody's Express on Cypress Gardens Boulevard.

Like all restaurants, Davis said, his establishments have felt the economy's effects, but to a lesser degree than others.

"I think the thing you've got to understand is barbecue is considered to be a good value," Davis said. "When you get into hard times, people turn to comfort food, and if anything is comfort food in Central Florida, it is barbecue."

Davis's approach to the situation is a textbook example of what restaurants do to stay afloat during tough times, said Larry Ross, a business professor at Florida Southern College who has worked in and consulted for the restaurant industry for more than 30 years.

Ross described immediate, mid-term and long-term approaches many restaurant owners take during tough economic times.

Immediate approaches tend to be optimistic, Ross said. Owners reduce costs and increase marketing because the industry becomes more competitive.

Mid-term, restaurant owners become more aggressive, with marketing that increases traffic, such as "buy one, get one offers," Ross said, adding "Couponing goes crazy."

If coupons work at increasing traffic, they can cost a lot and giving something away means reducing other operating costs, such as operating hours.

When it comes to long-term approaches, the riskiest, "but most successful is to transform yourself and quit doing what you're doing," Ross said.

The 1980s recession birthed lots of new restaurant concepts, he said.

From a consumer standpoint, people don't stop eating out when economic times are lean - they start eating cheaper.

Ironically, "mom and pop (restaurants) have an advantage the big boys don't have," in tough times, Ross said. "When it gets tough, mom and pops can hunker down; they can cut their own pay and pick up more of the labor themselves.

"It's tough for them, but they'll work it out," he said.

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